Margin call: Imitating Wall Street model, Standard Capital to modernise trading


KARACHI: 

If you have watched a Wall Street flick like Margin Call, the sight of rows upon rows of multiple-screen terminals showing real-time stock movements on a vast trading floor buzzing with hundreds of equity dealers should not be completely unfamiliar.

While the size of the Karachi Stock Exchange (KSE) is surely a far cry from Wall Street’s enormous volumes, the fact remains that none of the 120-odd active KSE brokers maintainsan awe-inspiring equity sales desk that could even remotely resemble the trading platform of a big Wall Street firm.

But the way brokerage is done in Pakistan may well change soon – perhaps forever. With Standard Capital Securities, a medium-size brokerage house based in Karachi, launching a massive drive to train the next generation of equity traders en masse, it appears that the era of small trading desks employing a limited number of trained equity dealers to serve a disproportionately large number of clients is about to end.

“There are hundreds of graduates who have just come out of universities without any job offers in hand. We’re going to train them to become active online stock traders. We’ll advertise for this programme, select young graduates on merit, and train them over a period of six weeks,” Standard Capital Securities CEO Naushad H Chamdia told The Express Tribune in an interview.

The six-week course will include training for technical analysis, fundamental analysis, basic charting, advance interactive charting and analytical tools like moving average convergence divergence (MACD). In case the course contents sound too many to be covered in six months, one needs to look at legendary Wall Street firms like Goldman Sachs that are known for selecting and training graduates from completely non-finance disciplines – such as philosophy and political science – to become equity traders through a brief yet rigorous programme.

“In the West, they sit there in large numbers, call up their clients and help them trade stocks. That’s exactly what I’m trying to do here,” Chamdia said.

Standard Capital Securities will formally start the selection process in about one and a half months for the first batch comprising about 15-20 people. “This is going to be an ongoing programme,” he said, adding that the training will not necessarily lead to a job at his brokerage house.

Having a business degree is no requirement, as any graduate, or even a partial graduate, can be selected if they show promise, aptitude and a sound understanding of basic financial concepts, he noted.

“After getting trained, their assignment will be commission-based. They’ll work from our premises and use our infrastructure and research tools while getting a minimum package, which will include mobile phone and conveyance allowances. After that, the sky is the limit,” Chamdia said.

But given the fact that the opportunity to increase the volume of business by training a whole new cohort of capital market professionals always existed in Pakistan, why did no other brokerage house ever think of it?

“Nobody else in Pakistan adopted such a strategy simply because they don’t have the kind of online infrastructure that we have,” he said. Being a finance and computer science major from the University of Maryland, Chamdia claims no brokerage house in Pakistan can match Standard Capital Securities when it comes to online infrastructure and the technical and fundamental tools that its website offers in real time.

Published in The Express Tribune, August 22nd 2013.

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